Cloud security startup Netskope raises $300M at $7.5B valuation
Netskope Inc., a startup that helps about a third of the companies on the Fortune 100 list secure their network traffic, has received a $300 million late-stage funding round valuing it at $7.5 billion.
Iconiq Growth was the lead investor in the Series H round, which Netskope announced this morning. A number of existing backers including Lightspeed Venture Partners, Accel and Sequoia Capital contributed as well.
Netskope competes in a fast-growing part of the cybersecurity market that Gartner Inc. calls the SASE segment. SASE stands for secure access service edge. Products in this category provide features for three different tasks: blocking malicious websites as a company’s employees browse the web, helping them securely log into work applications and securing data they transfer to and from cloud services such as Dropbox.
For the first task, blocking web-borne malware, Netskope provides a security engine that can prevent employees from connecting to insecure sites. The engine uses machine learning to identify web pages containing malicious code. Moreover, it can double as an ad blocker, preventing pages from connecting to ad servers and tracking systems.
The second task Netskope helps with is logging into work applications. The startup provides features that allow administrators to reduce the risk of breaches by only enabling a user to log into an application if certain cybersecurity conditions are met. For example, a company could configure Netskope’s software to authorize attempts to access its accounting system only if an employee is signing in from a company-issued device.
Administrators can define access rules in a more granular way if needed. A company could choose to let employees sign into the accounting system from both company-issued and personal devices, but disable their ability to download data if they’re using a personal device. It’s possible to customize the process based on a variety of other factors as well, such as whether an employee is connecting to a system from a public Wi-Fi network.
Netskope also enables enterprises to ensure cybersecurity rules are enforced after an employee has logged into an application. The startup provides tools that organizations can use to secure business data their employees keep in software-as-a-service applications.
One of the main cybersecurity challenges involved in the task, which Netskope addresses, is the use of so-called unmanaged accounts. For example, an employee might accidentally upload an important business record to their personal Dropbox account instead of the corporate account managed by their company’s information technology department. Netskope detects such incidents by scanning the web traffic headed to a company’s cloud services and can block the transfer of sensitive files automatically.
One of Netskope’s key selling points is that it provides all its security capabilities as part of one platform. Normally, managing employee login requests to applications, blocking malicious websites and securing cloud-based data are tasks that each require a separate cybersecurity tool. Netskope’s platform allows enterprises to purchase the capabilities from one provider rather than three different companies, which simplifies operations.
This product approach positions the startup to address a fast-growing market opportunity. “By 2024, 30% of enterprises will adopt cloud-delivered SWG, CASB, ZTNA and branch office firewall-as-a-service capabilities from the same vendor, up from less than 5% in 2020,” Gartner noted in a recent research report cited by Netskope. SWG, CASB and ZTNA are industry terms that describe products for filtering malicious websites, protecting cloud data and managing employee logins, respectively.
Netskope delivers its capabilities with the help of a cloud-based system dubbed NewEdge. The startup describes it as a “global security network” that acts as an intermediary between employee devices and a company’s business applications.
Web traffic sent from an employee device to one of a company’s cloud services goes through NewEdge rather than traveling directly to the cloud. Netskope’s login management and data protection features, which run on top of NewEdge, carry out the necessary cybersecurity procedures, then forward the traffic to the relevant service. Netskope claims that the system manages about 20% of all commercial Office 365 traffic globally.
The startup also says that its platform is used by more than 1,500 organizations worldwide, including more than 30 of the companies on the Fortune 100 list.
“We started Netskope because we saw a cloud-centric, digital-first future of business that simply can’t be achieved using legacy approaches to security and networking,” said Netskope co-founder and Chief Executive Officer Sanjay Beri (pictured).
Netskope has raised more than $1 billion in funding to date.
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